In a recent report, the Institute for Energy Economics and Financial Analysis (IEEFA), a US-based think tank, ranked Tamil Nadu as one of the top nine markets in the world for acquiring a high percentage of net energy needs from renewable energy sources.
The study was an assessment of the top 15 countries or power markets in the world, where the share of solar and wind energy in proportion to their total energy requirements is high. Denmark leads the way, with 53% of its energy coming from renewable sources in 2017, followed by Southern Australia and Uruguay.
In 2016-17, Tamil Nadu acquired 14.3% of its energy needs from wind and solar energy sources.
“Tamil Nadu also leads India in installed renewable energy capacity. Of the total 30 GW of installed capacity across the state as of March 2017, variable wind and solar power accounted for 9.6 GW or 32% of the total. Firm hydroelectricity added another 2.2 GW or 7%, nuclear 8% and biomass and run of river, 3%. As such, zero emissions capacity represents a leading 50% of Tamil Nadu’s total installed renewable energy. With much of Tamil Nadu’s renewable energy coming from end-of-life wind farms installed 15-25 years ago, average utilisation rates are a low 18%, making the contribution of variable renewables to total generation even more impressive,” says the IEEFA report.
Total installed renewable energy capacity for Tamil Nadu stands at approximately 10,800 megawatts (MW), of which 7870 MW comes from wind and 1,697 MW solar, while the rest comes from biomass and small hydro projects. Although it comes third in solar energy capacity behind Andhra Pradesh (2,010 MW) and Rajasthan (1,961 MW), the state tops the charts in wind power capacity ahead of Gujarat (5429 MW) and Maharashtra (4,752 MW). Tamil Nadu generates more wind energy than Sweden (6.7 GW) and Denmark (5.5 GW), the birthplace of wind energy.
“This rise in renewables is predicted to coincide with a slide in coal’s share in Tamil Nadu’s electricity mix, from 69% in 2017 to 42% 10 years later,” says the World Economic Forum. The state has also diversified into biogas and small hydro plants as well.
“As of March 2017, the state had 1 GW of biomass and run-of-river small-scale hydro, 2.2 GW of conventional hydroelectricity, and 1 GW of gas fired power capacity operational (plus another 1 GW of gas under construction),” reports the IEEFA. In an interesting aside, it also hosts the second largest solar farm (Kamuthi) in the country with a capacity of 648 MW.
This is a heartening development as it comes a time when the Government of India has set a target of sourcing 175 gigawatts of energy from renewable sources by 2022.
When it comes to renewable energy in India, one could consider Tamil Nadu as a pioneer of sorts. Most of its wind farms, for example, were built approximately 25 years back.
The natural conditions in the state favour the growth and development of solar and wind energy. The Tamil Nadu coast receives high wind density and velocity. For six months it receives heavy wind flows, while four months see moderate flows. Also, the state receives 300 or more days of sunshine.
The state’s sojourn into renewable energy began as an emergency attempt to fill the growing deficit between supply and demand of power.
Major industries like automotive parts, textiles, cement and leather-tanning, for example, demanded large amounts of power and consequently, the feed-in tariff (payments to ordinary energy users—people or businesses—for the renewable electricity they generate) for the wind energy sector was encouraging.
The price at which wind energy is sold to the people today is determined at an open auction for power utilities. Earlier, the state power regulators had a stranglehold on determining prices but changed to an auction system in 2016.
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With the local textile sector first grabbing the bull by its horns, Tamil Nadu also became one of the first states to allow industrial units to establish their own wind power plants. These 20-year-old wind farms owned by the Tamil Nadu Spinning Mills Association (TASMA) generates a little less than 40% of the state’s total wind energy capacity (3000 MW). The Muppandal wind farm outside Madurai, for example, generates 1.5 GW of energy, making it the largest wind farm outside China.
With favourable tariff conditions, the state also made serious progress in the solar energy arena.
“In recent years, the government has also worked to improve its transmission infrastructure, encouraging firms to expand. Since renewable energy is infirm, managing the fluctuation in power generation is key. Tamil Nadu has begun forecasting the flow so that the grid is ready to handle things,” says this recent report in Quartz India.
Having said that, the IEEFA has argued in its report titled ‘Electricity Transformation in India: A Case Study of Tamil Nadu’, it argued how the state’s growth in wind and solar energy generation isn’t enough.
“Tamil Nadu should double its wind energy capacity to 15GW and increase its solar capacity to 13.8GW by 2026-27 to deliver cheaper electricity to customers,” the report said.
Instead, what the state is doing is looking to build 25,000 MW of thermal power projects. “Despite being a world leader in wind energy, Tamil Nadu’s wind farms have ageing and outdated technology. Upgrading the existing turbines alone could double the state’s leading wind energy capacity,” said Tim Buckley, IEEFA’s director of energy finance studies, Australia.
There are other concerns, as well. “Renewable energy assets in Tamil Nadu are facing significant back down (as state power utilities are buying little power from these plants). This adversely impacts their feasibility,” Kanika Chawla, a renewable energy expert at Delhi-based non-profit Council on Energy, Environment, and Water, told Quartz India.
Primarily, the major concerns stem from state regulation-related issues. For starters, the state-owned power utility Tangedco has proposed an additional imposition of taxes on rooftop solar plants, says this Times of India report.
Last July, Tamil Nadu was unable to use all the solar power it generated. In the wind energy sector, the government could stymie TASMA’s ability to drawing back the excess power it delivers to the power grid in the event of a shortage (wind banking). What one must understand is that TASMA generates and delivers excess wind energy to the power grid.
However, the biggest concern is the dire financial condition of the state power utility. In 2016-17, the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) posted a loss of Rs 3,783 crore, besides year-long delays in the payment of dues to power-generating units.
As a result, these power generation units are unable to repay loans they had taken from the banks to install all the necessary equipment. The poor state of regulation in the state’s power sector is a real concern.